Tax controversies prompt increased powers in Bill

The additional powers given to the office of the Revenue Commissioners in yesterday's Finance Bill significantly increase its powers of investigation and are seen as a direct response to public disquiet over the National Irish Bank offshore accounts affair and the Ansbacher accounts controversy.

The new powers mean the Revenue is free to check anybody's bank accounts when they are suspected of tax evasion.

They will also be able to investigate the accounts of people they suspect may be connected to tax evaders.

The proposed new powers are certain to lead to debate as the Bill goes through the Oireachtas. Although tentatively welcomed in some quarters, the Institute of Taxation in Ireland - which represents many tax practitioners - last night expressed serious reservations about the new powers and called for a new tax ombudsman to oversee them. The institute said the new powers were so extensive that there might no longer be sufficient checks and balances in the system to protect the rights of innocent taxpayers.

"Many of the new powers can be utilised by the Revenue with the consent only of a Revenue Commissioner," said the institute's president, Mr Pat Cullen.

The Bill gives the Revenue Commissioners major new powers, including the power to enter any premises including people's homes, on foot of court warrants, and to use "reasonable force" where necessary. Existing powers are to be extended to widen access to the bank accounts of named individuals, where the Revenue believes the institution has certain information on the taxpayer's tax liability. This can be done on foot of a signature of one of the three Revenue Commissioners - whereas formerly this had to be done on foot of a High Court Order or an appeal commissioner.

To check bank accounts, the Revenue Commissioners must have evidence of tax evasion, but the nature of that evidence is "an operational matter for the Revenue Commissioners", said Finance Minister, Mr McCreevy yesterday.

The Revenue has also been granted powers to search bank accounts not just of ordinarily resident individuals but also of companies, trusts and connected persons. The powers will cover investigating accounts held by "unidentified persons or classes of persons". It is understood this power clears the way for the Revenue to obtain details of individual holders of bank accounts. This could apply in cases such as the Ansbacher deposits where the tax authorities knew accounts were held in Guinness & Mahon, but they could not investigate them because they did not have the account holders' names.

The Revenue will be able to examine the accounts for evidence of tax evasion in all tax categories - not just income tax and corporation tax as is currently the case.

The Bill includes powers to examine non-resident bank accounts where there is reason to believe that the true owner is resident in Ireland. It will also allow the Revenue to delve deeper into the procedures and systems used by financial institutions regarding non-resident accounts. The Revenue will be able to examine a "sample" of non-resident accounts to ensure they are genuinely non-resident.

The Bill has extended the definition of "bankers' books" to include "relevant " supplementary information in a bank's possession, such as background documentation. The Revenue will be able to conduct more detailed investigations of the banks themselves, carrying out "on-site audits" instead of just PAYE or VAT audits as at present.

In what was being seen last night as a direct response to the payments by Mr Ben Dunne to Mr Haughey, the Government has moved to ensure that the donor - as well as the recipient - makes returns to Revenue of gifts for Capital Acquisitions Tax (CAT) purposes.

The Revenue has been given increased powers to demand information from taxpayers on all their tax affairs and to reply to questions posed by tax inspectors. The Revenue will also be able to demand all insurance documents. This means they will be able to cross-check the value of assets declared to them, compared to the value declared to the insurance companies, and also the extent of them.

A spokeswoman for the Institute of Chartered Accountants in Ireland said they were "fairly sweeping powers" but the institute would support the objective if the Revenue and the Government felt they needed such powers to detect tax evasion.

IBEC's director of economic affairs, Mr Brian Geoghegan, said it was broadly supportive of measures which ensured the tax system was fairly and evenly applied across the economy.